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Reports from the 51st annual Heckerling Institute on Estate Planning.

Reports from Heckerling 2017: Highlights from Recent Developments 2016

2017 marks the 51st annual Heckerling Institute on Estate Planning, which convened in Orlando, Florida the week of January 9.  Heckerling is the largest and most prestigious estate planning conference in the country. This year's Institute has drawn a record crowd of 3,100 attendees, comprised of the nation’s leading trust and estate attorneys, financial advisers and service providers.

The conference kicked off with the famous observation from Confucius: “May you live in interesting times!”, which, given the recent election results, was certainly apt. In fact several conference sessions discussed the potential changes to estate law that might occur in 2017.

Several EisnerAmper professionals attended the Institute to report on the hot topics being discussed.

Here is the first of a series of reports from the 2017 Heckerling Institute on Estate Planning.


Panelists Dennis I. Belcher (McGuire Woods, LLP), Ronald D. Aucutt (McGuire Woods, LLP), and Catherine Veihmeyer Hughes (U.S. Treasury Department, Office of Tax Policy) began the Recent Developments session by informing attendees that, when they met meeting this past summer to discuss this presentation, they all thought that it would be a great year for planning ideas.  There was finally stability in the estate and gift tax rates and the overall assumption of an estate tax exemption between $3.5 million and $5 million.  Then came the IRC section 2704 proposed regulations and the election of Donald Trump.  All stability in estate planning just went out the window!

The panel first addressed the IRC sec 2704 proposed regulations. Ms. Hughes stated that nothing in the proposed regulations was intended to eliminate ALL minority interest discounts and this will be made very clear in the final regulations, along with many other changes. The IRS is currently reviewing over 10,000 comments received and have heard 36 professional witnesses who addressed the panel with their concerns and comments. The panelists would like to see “re-proposed” Section 2704 regulations issued before there are any final regulations in order to assure that the confusion is addressed and all are in agreement as to the facts. As for appraisers, there is really nothing different for them to do now.  Proposed regulations have no jurisdiction over current law.  However, one interesting suggestion for planners is that for gift returns filed post August 2, 2016 ( which is the date of the proposed regulations), it would be prudent, if applicable, to attach a statement to the returns, stating the gift return had been prepared contrary to the proposed regulations under IRC 2704. This should avoid any penalties that may be imposed.

The panelists then discussed President-elect Trump’s tax proposals and the Republican House blueprint for tax reform. The consensus was that if there was ever a year for the repeal of the estate tax, it is now. The Republicans have been fighting to eliminate the estate tax for two decades, always saying they would if they could – and, well, now they can. They have no excuse not to move quickly in this area.  The unknown is what the estate tax will be replaced with and if they intend to leave the gift tax alone or make changes in the gift tax regime also.  The panelists suggested that if the estate tax is repealed, there may be a deemed capital gains tax imposed at death.  The capital gains tax will begin for transfers over some threshold amount, such as $10 million.  

The gift tax has not been addressed much in the estate tax discussions.  The gift tax is needed as an income tax back-stop.  It is a way to avoid a family transferring assets to lower income members in a year with a large taxable event and then transferring back when needed.  So, what is a planner to do? If you take a wait and see approach, you may have missed some opportunities for clients in the meantime.  You may have situations where health or other factors requires the transfer of property sooner than later. The suggestion is to use GRAT’s, annual exclusions, sales to a defective grantor trust, and other vehicles which allow the transfer and shift of appreciation without a gift tax.  The one point all panelists agreed on in this area is that until we have clarity, planners should not suggest lifetime gifts that would incur the payment of a current gift tax.

Lastly, Ms. Hughes discussed many areas the IRS is looking into at this time.  One important announcement is that the IRS will no longer be issuing estate closing letters and requests will only be addressed under unique circumstances.  The IRS simply does not have the resources to issue these letters.  However, she did suggest that taxpayers can request an “account transcript.”  If you receive this transcript and it has “CODE 421” on it, the estate is considered closed by the IRS.  Hopefully this will be sufficient for banks to release the remaining funds and final distributions to beneficiaries can be made.

For more content stemming from the 2017 Heckerling Institute on Estate Planning, please click here.


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Barbara Taibi has over 20 years of public accounting experience and is a member of the American Institute of Certified Public Accountants and New Jersey Society of Certified Public Accountants.

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