The 59th Annual Heckerling Institute on Estate Planning provided critical insights into the evolving tax landscape, legislative uncertainty, and advanced planning strategies for high-net-worth individuals. Below is a summary of the main topics covered and notes to consider.
Summary of Key Sessions from Heckerling 2025
Practical, Prudent Planning for 2025 and Beyond
- Estate Tax Sunset Considerations: The current estate tax exemption (approx. $13.61M per person) is scheduled to sunset in 2026, dropping to around $7M unless Congress acts.
- Planning Strategies:
- Utilize remaining exemption through lifetime gifts before 2026.
- Consider Spousal Lifetime Access Trusts (SLATs)but avoid the reciprocal trust doctrine.
- Use Qualified Personal Residence Trusts (QPRTs) cautiously, as assets revert to the taxable estate if the grantor dies before the trust term ends.
- Grantor Trusts and SLATs:
- Potential IRS scrutiny on grantor trust taxation, making flexibility in trust terms important. Include mechanisms to “toggle off” grantor trust status.
Business Succession Planning & Buy-Sell Agreements
- Key Discussion on Business Transfers
- Connelly v. United States (2024): Corporate-owned life insurance must be included in business valuation for estate tax purposes, impacting funding for buy-sell agreements.
- Seven Steps to Successful Business Succession: Emphasis on non-tax aspects like governance, control, and leadership continuity.
- Supreme Court’s Impact: Cases such as Moore v. U.S. indicate potential shifts in how income is recognized, affecting closely held businesses.
Recent Developments in Estate & Tax Law (2024)
- Potential Legislative Changes:
- The 2024 elections could influence whether the estate tax exemption is reduced or extended. IRS guidance on step transaction doctrine, especially for spousal transfers and SLAT funding. Basis Planning:
- The IRS is emphasizing basis consistency between estate tax returns (Form 706) and income tax returns. New regulations clarify reporting rules for foreign trusts and offshore gifts.
Fiduciary Litigation and the Corporate Transparency Act (CTA)
- Notable Fiduciary Cases:
- Courts continue to apply Powell and Moore in Section 2036 challenges to discounting family limited partnership (FLP) interests.
- IRS is aggressively challenging valuations where the decedent retains control over FLP assets. Corporate Transparency Act Compliance:
- Reporting requirements for beneficial ownership of entities take effect in 2025. Potential constitutional challenges could affect enforcement.
International Trust & Taxation Issues
- Non-U.S. Trust Law for U.S. Beneficiaries:
- New complexities in foreign trust reporting.
- Importance of understanding expatriation rules for clients moving abroad. Planning for Cross-Border Clients:
- U.S. attorneys need to assess foreign trust compliance to avoid IRS penalties under new guidance.
Ethical Considerations & Professional Standards
- Cultural Competency in Estate Planning:
- Addressing religious and cultural beliefs in inheritance and burial planning. Avoiding conflicts of interest in multigenerational wealth planning.
- Estate Planning Under the CTA:
- Identifying and disclosing ultimate beneficial owners (UBOs) for trust and entity structures.
Key Takeaways for Attorneys & CPAs
- Consider action items for high-net-worth clients before estate tax laws
- Review business succession plans in light of Connelly U.S.
- Monitor compliance with new basis consistency and foreign trust reporting
- Understand the Corporate Transparency Act—especially for trusts and business
For a consultation on how these changes affect your estate plan, please contact us atThe Thigpen Group. We are here to help ensure your estate planning remains effective and compliant in the current regulatory landscape.
David Martin, Director of Private Client Group, The Thigpen Group 601-713-8328 – [email protected]
Legacy Book
Last month we introduced Final Thoughts for My Family, a resource for your Legacy Book designed to simplify the process of organizing key documents, financial details, and personal reflections. Whether you’re starting from scratch or enhancing your existing Legacy Book, this guide can help.
Click here to access the resource or reach out to Julie Humphreys, Director of Operations and Client Services, at [email protected] for assistance.
