Monthly Archives: August 2016

August 12, 2016

High Net Worth Taxpayers and their Advisors Should Act Now to Address the Proposed Regulations to Section 2704

by Margot S. Edwards and Anne A. Zeckser

Due to recently proposed regulations to Section 2704 by the U.S. Treasury Department, high net-worth taxpayers and their advisors need to act now to evaluate the best course forward. The proposed regulations threaten to significantly curtail the application of discounts to intra-family transfers of entity interests, which impact key gift and estate tax planning techniques used for high net-worth individuals.  For wealthy families and their advisors, these proposed regulations call to mind the flurry of wealth transfer planning activity that took place in late 2012.  Advisors are anticipating a very busy fourth quarter working with clients to address the impact of the proposed regulations.

Who Should Act Now

In consultation with their advisors, the following taxpayers should look carefully at their assets to determine whether there are any opportunities to shift substantial value out of the taxpayer’s taxable estate before discounts effectively disappear:

  • Taxpayers whose estates are subject to the imposition of estate tax
  • Taxpayers who have historically made annual gifts of discounted business interests to family members or trusts
  • Taxpayers who have been considering establishing a long term trust for family members to hold business interests
  • Taxpayers who have an existing trust in place for family members
  • Taxpayers who have a need for business succession planning

Next Steps – What to Do and When

The proposed regulations could become final and effective as early as late December 2016 (although a later effective date is more likely) and a hearing on these regulations is scheduled for December 1st. As a result, all family business owners and wealthy taxpayers should take this opportunity to meet with their team of advisors to review their wealth transfer plans and, if additional transfers are warranted, initiate that process as soon as possible.

The affected taxpayers should consider gifts or sales of discounted business interests to family members or trusts by the end of this year. However, it is important to note that there will likely be a 3-year-look-back on transfers.  These taxpayers should also consider the transfer of discounted entity interests to a trust in exchange for a note or an annuity interest to preserve future planning opportunities.  While it is unclear whether the IRS will require some sort of consistency of valuation for payment of promissory notes and annuity interests, there is the potential that payments could be made with undiscounted interests later, further enhancing the tax savings. Read more >>

August 11, 2016

Probate and Trust Cases Now Searchable in ICCES

by Jody H. Hall, Paralegal

As of Monday, August 7, 2016, practitioners can now search for probate and trust cases in the Integrated Colorado Courts E-Filing System (“ICCES”).  In the past, Colorado probate estate and trust cases were only available for viewing by attorneys of record.  If someone needed to determine if a case had been opened, he or she would need to contact the court clerk’s office and often pay a search fee.  In the most recent release of ICCES, registered users can search to determine if a probate estate or trust matter has been opened; however, the documents themselves will only be available for online viewing to parties of record and to the Court.

Protective proceedings will remain a protected filing class and only attorneys of record will have access to those cases.  An entry of appearance will need to be filed, and accepted by the court, in these matters to gain access.

All Public documents submitted in trust and estate cases prior to August 6, 2016, will be set to a document security type of Protected and not available for viewing unless counsel is of record in the case.

Click here to view the Probate Enhancements section of the Colorado Judicial Branch E-Filing News Newsletter, August 2016.

August 1, 2016

Issuance of IRS Estate Tax Closing Letters

by Kimberly Rutherford

After Carol Warnick’s blog of December 14, 2015 briefly discussed the new procedure enacted by the Internal Revenue Service (the “IRS”) regarding the issuance of Estate Tax Closing Letters (“closing letter”) only if specifically requested by the taxpayer for all estate tax returns filed after June 1, 2015, we decided to watch closely to see what happened with our requests for closing letters.

The IRS’s website of “Frequently Asked Questions on Estate Taxes” had been previously updated on June 16, 2015, and addressed the issue of when a closing letter could be expected. The IRS asked that taxpayers wait at least four months after filing the Estate Tax Return to make a request for the closing letter.  The website also included a chart detailing when the IRS will and won’t issue a closing letter.

Read more >>