As I mentioned in my last post, the IRS recently released proposed regulations which effectively end valuation discounts that have been relied upon for over 20 years. If the IRS’s current timetable holds, these regulations may become final as early as January 1, 2017. Although that date isn’t set in stone, we expect that the regulations will be final around that time or shortly thereafter.
With New Regulations Looming, What Can You Do Now?
As I mentioned before, the timetable isn’t set in stone. Luckily, there’s still a narrow window of time to implement “freezing” techniques under current, more favorable law, to save taxes and protect your family’s inheritance.
Depending on your circumstances, some options are going to be a better fit than others, and you will want to make sure you get the best outcome possible. Some of these “freezing” techniques involve the use of a family business entity to own and operate your family fortune, in combination with one or more special tax-saving trusts. These plans provide numerous benefits including asset protection, divorce protection, centralized management of assets, and more – in addition to the tax savings.
Unfortunately, these types of plans can take 2-3 months to fully implement and time is running short.
What Should You Do Now?
First, schedule an appointment with your estate planning attorney as soon as possible. Now is the time to start this process to determine what options are available to you under current law between now and the end of this year.
Second, find and review your estate planning documents. Regardless of who prepared your plan, now’s a great time to review your plan. When you meet with your estate planner, you will want to make sure that anything you do to help you protect your family’s inheritance from the IRS still achieves your overall planning goals – and not just the tax-saving goals.
If you do not have a current estate planning attorney or if you would like to consult with our office on this issue, please feel free to give us a call. We would be happy to assist you with the immediate implementation of your wealth transfer plan using valuation discounts that are still available under current law.