The IRS recently proposed regulations that will effectively eliminate several commonly used valuation discount strategies. If the IRS’s current timetable holds, your clients may lose the ability to take advantage of certain valuation discounts as early as January 1, 2017. For you or your clients who have an estate large enough to be subject to the estate tax, this new regulation will have a massive impact.
We have a narrow window to implement strategies that utilize valuation discounts. Working together, we can help provide measurable value.
With These Regulations Looming, What Should You Do Now?
First, read the insight brief by clicking HERE, The End of Valuation Discounts is Coming. Legalese aside, you’ll learn the background context of valuation discounts as well as the IRS’s new regulatory scheme that effectively eliminates many of our most powerful estate tax planning strategies.
Second, call us as soon as possible. We’d like to discuss with you the type of clients that are best fit for this planning. In general, most people of significant wealth, such as those with taxable estates (over $5.45 million), near taxable estates (as low as $2 million, depending on the client’s age), significant real estate holdings, or closely held businesses, can receive overall benefit from a valuation discount based strategy, but it is important to make sure that any planning we do is a good overall fit. That’s why we need to talk, and why we need to work directly with you at implementing a plan.
While the August 4, 2016 IRS Notice is the big motivator here, we’re also paying closer attention to what would happen if Hillary Clinton is elected and follows through on the promise to reduce the Estate Tax exemption to $3.5 million and raise the tax rate on the excess above $3.5 million from 40% to 45%. This is not nearly as unthinkable as we thought a few months ago.
Delay plays right into the IRS’s hands. January 1, 2017, may seem like a long way off, but it is only a few months away. The clock is ticking, and the month of October is THE month for clients to work together with us to develop a plan they will still have time to then implement before this window of opportunity closes. Of course, there is a chance that the proposed regulations may not become final immediately since the IRS will hold a public hearing and there’s at least a 30-day window after that hearing. But, is delay worth the risk? Our answer is “no.” Implementing a plan now using current law governing valuation discounts and using the current $5.45 million exemption is the best option.
We are available to assist you with the immediate implementation of wealth transfer plans using current law. If you, your clients, or prospective clients are motivated to move forward now, please call to discuss the steps you need to take to protect your client’s wealth.
We also offer free workshops in our office. These workshops are designed to answer the most frequently asked questions about estate planning as well as provide the attendee with planning options they may not have previously considered.
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