Converting to Nongrantor Trusts to Minimize Income Tax: Maximizing Increased Exemption Benefits

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Course Details

Course Information

smart_display Format
On-Demand
signal_cellular_alt Difficulty Level
work Practice Area
Estate Planning

Date & Time

event Date
Tuesday, February 4, 2020
schedule Time
1:00 p.m. ET./10:00 a.m. PT
timer Program Length
90 minutes

Credit Information

This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$297.00

This CLE course will provide estate planning counsel with a thorough and practical guide to using nongrantor trusts to minimize income tax on trust assets. The panel will focus on the new tax regime where income tax planning is often more important than estate tax planning, detailing the difference in tax treatment under the tax reform law, and will discuss converting existing grantor trusts to nongrantor trusts. The webinar will outline jurisdictional considerations in turning off grantor trust features and offer specific tools to maximize the income tax benefits of nongrantor trusts under the new wealth transfer tax regime.

Faculty

Michaels Philip

Shareholder

Norton Rose Fulbright, LLP

Mr. Michaels is a partner in the New York office focusing on estate and tax planning, including estate and trusts administration, termination of trusts, settlement of estates and trusts and estate and gift tax matters.

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Ure John

Shareholder

Cherry Bekaert

Mr. Ure focuses his practice on serving the needs of high-net-worth business owners, individuals and their families. He specializes in working with clients through all phases of growth: from start-up, to business growth and succession, to retirement and gift planning

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Description

The new tax law provisions increase the estate tax exemption, reducing or eliminating certain deductions, and accelerates the need for estate planners to revisit existing wealth transfer structures. Individuals using grantor trusts to minimize estate tax exposure may be better served transferring assets to nongrantor trusts to reduce income tax. This planning can also create additional income tax deductions under the new pass-through business rules.

The estate tax exemption amount of $22.8 million for married couples, for 2019 ($23.16 million for 2020), eliminates estate tax concerns for even higher net worth taxpayers, at least until the exemption sunsets. However, lost deductions will hit many taxpayers much harder, increasing the federal and state income tax burden on many income-generating assets. Grantor trusts, long the preferred vehicle for settlors looking to minimize or defer wealth transfer taxes, will be less impactful.

Planners should consider restructuring existing grantor trust vehicles to convert trusts holding assets such as real estate to nongrantor trusts. Additionally, certain spousal trusts may benefit from conversion to nongrantor trust status through the inclusion of an "adverse party" with the right of approval over marital distributions.

Listen as our experienced panel provides a practical guide to migrating assets from grantor trusts to nongrantor trusts to minimize income tax on trust assets and use up the temporarily increased estate exemption amounts.

Outline

Tax impact of new tax law on current grantor trust structures
Switching off grantor trust features in current trusts
Converting spousal trusts to nongrantor status through the use of adverse parties
Incomplete gift nongrantor trusts