Who Pays What? Understanding Estate Planning Basics

With the Gift and Estate Tax Exemption at an all-time high, clients and practitioners often wonder whether complex estate planning is really necessary. In this course practitioners will learn that estate tax is only one of many important considerations clients must analyze when planning their estate. More and more, clients have children from prior marriages or beneficiaries with disabilities or substance abuse issues. Protecting funds for the intended beneficiary and sheltering assets from creditors or ex-spouses is just as important as protecting assets from estate tax. In addition, basis adjustment opportunities should not be ignored as they can provide valuable tax savings. Practitioners will come away with a thorough understanding of the various estate planning techniques clients can use to protect their hard-earned assets from future uncertainly.

The effectiveness of many tax and estate planning techniques is directly linked to the applicable federal interest rate. With the change in AFR from nearly zero to now over 5%, practitioners are starting to revisit previously abandoned techniques and reevaluate current plans that could benefit from possible modification. In this course, we will examine how the change in interest rate makes certain estate planning tools such as CRTs and QPRTs more attractive and other tools such as GRATs and IDGTs less attractive. We will also examine the options clients have to modify current plans to take advantage of the changing rates. In addition to estate planning techniques, we will also discuss more informal planning considerations surrounding tax deductions and income tax mitigation during these higher interest periods. A general understanding of estate tax and estate planning will be helpful before taking this course.

When the Tax Cuts and Jobs Act passed in December 2017, the Basic Exclusion Amount for estate and gift tax was temporarily doubled to $10M (adjusted for inflation) until 2026. As the end of this increased exemption period draws closer, taxpayers and their advisers must begin planning for how to use the temporarily increased exemption or risk forever losing this multi-million dollar tax benefit. In this course, we will review the statute and regulations governing this temporary increase and discuss popular estate planning methods for using the exemption before it expires.

Most estate plans contemplate benefitting the younger generation which often includes minor children, grandchildren, nieces and nephews. However, when these youngsters are named recipients, special care must be given to ensuring the post-death claim process is not unduly burdensome. In this course, we will review what happens when minors are named as beneficiaries of financial accounts or real estate and how wills or trusts can be drafted to ensure optimal outcomes for families without triggering additional administrative headaches.