Recently the IRS released proposed regulations under Chapter 14 of the Internal Revenue Code that would severely limit—if not eliminate—the application of valuation discounts, including lack of marketability and minority discounts, to interests in closely held family entities for gift, estate, and generation-skipping transfer tax purposes. If finalized in their current form, the proposed regulations will have a significant impact on future estate planning for high net worth individuals and, potentially, on estate plans which were recently put into place.
Trust and Estate Planning
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Tax Spotlight – Last Call for Valuation Discounts
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Proposed regulations covering the valuation of family controlled entities for transfer tax purposes—12 years in the making—were published by the IRS on August 4, 2016. If newly proposed IRS Regulations are finalized in their current form, nearly all valuation discounts on family controlled entities will be eliminated. Given the December 1st public hearing date on the proposed regulations, there is a brief window of opportunity for families to transfer business and investment assets at a reduced gift tax cost. Now is the time to act.
The long-awaited and much-speculated about regulations to Section 2704 were issued in early August 2016. As issued, the proposed regulations expand the scope and reach of section 2704 to preclude use of various structural techniques to artificially suppress the value of interests in entities transferred by taxpayers or owned by them at death. The IRS is likely to receive a great deal of commentary from the estate planning and valuation communities, respectively. Therefore, the final form of these regulations is difficult to predict at best.
Managing fiduciary responsibilities within a private trust company can sometimes feel like more of an art than a science. Developing effective and meaningful relationships with the beneficiaries, overseeing distributions and investment policy, understanding how and when decanting a trust is the best solution, while also being aware of the statutes under which the PTC should be operating all mandate experience and insight.
Treasury Department Issues Proposed Regulations Impacting the Valuation of Family-Owned Businesses
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For years, owners of family-controlled companies have taken advantage of applicable valuation discounts to advance their objectives in transferring wealth and company ownership to future generations in a tax efficient manner. On August 2, the Treasury Department issued proposed regulations under Internal Revenue Code Section 2704 to curb the use of valuation discounts in such circumstances. A public hearing on the proposed regulations has been scheduled for December 1, 2016.
The metaphorical glass slipper represents the combined interpersonal dynamics of your family and loved ones, your individual passions, goals, hopes and dreams, along with the complexity of your family’s estate plan. When combining the characteristics of your family with the complexity of your estate plan, the result is a unique dynamic with special needs—requiring a trustee with a complementary skillset. What skillset and qualifications should your trustee have?
Breakout Session 2B: Estate Settlement Readiness
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We invest a lot of time and energy figuring out the best way to pass wealth from one generation to the next. But how can anyone truly prepare for the practical realities of settling a family member’s estate while grieving and managing the impact of this loss on the family? This session will outline some of the things you can be thinking about now to be prepared for a death in the family, including planning for a family funeral.
2016 Tax and Estate Update
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In what is frequently our most popular Forum session, experts will share the latest updates in estate laws and taxes that family office executives need to watch for in 2016 and beyond.
Ethelyn McDaniel, Director of the Tax Controversy and Regulatory Services group of PWC will share what she is seeing as hot topics that the IRS is pursuing with high net worth families.
The death of a loved one is a difficult and emotional time for a family. There is often additional stress if you are appointed as the executor of the will and trustee of your family’s trusts, especially if the deceased had been the sole manager of substantial family assets and wealth. For an untrained person, it can be a daunting role. For these reasons and more, many families are choosing not to appoint a family member or close friend to be their executor and trustee. Rather, they are choosing a professional trustee company to act either solely or jointly with a family member.