Avi Z. Kestenbaum, Co-Chair of Meltzer Lippe’s Trusts & Estates practice group, shared key takeaways from this year’s Heckerling Conference with WealthManagement.com.
Avi Kestenbaum: Recent Developments, QSBS Planning and Interests in Trusts
The Heckerling Diamond Anniversary Conference was very informative and enlightening as always. While each audience member, depending on their level of practice and experience, may have benefited differently from the excellent presentations, I want to highlight three that I found particularly helpful for those representing affluent clients in tax planning.
The Recent Developments presentation might be the most important and informative presentation each year. The distinguished panel of Samuel Donaldson, Carlyn McCaffrey and Turney Berry were outstanding. Professor Donaldson is funnier and quicker on his feet than any late-night comedian. Some very interesting and perhaps slightly controversial points were brought up, including the application of the Internal Revenue Code Section 68(g) limitations to non-grantor trusts and even trust distributions to beneficiaries being subject to the 2/37th haircut, and therefore, potentially subject to partial double taxation. Many were literally floored by this, including some experienced practitioners whom I spoke with after the session. They believed this couldn’t have been the intent of the statute. Hopefully, Congress, the Department of Treasury or the Internal Revenue Service will clarify this later this year. If not, it will be interesting to see how the tax preparation software for trusts will follow and compute this. Carlyn McCaffrey gave us some creative solutions, such as annually granting trust withdrawal rights to certain trust beneficiaries, including charities, and using S corporations (S corps) to avoid taxation at the trust level. Turney Berry raised some excellent practical concerns about the withdrawal rights.
To touch briefly on two other outstanding presentations regarding high level tax planning, Paul Lee brilliantly presented again on qualified small business stock (QSBS). Every tax planner should understand planning opportunities with QSBS. It’s perhaps the greatest gift in the entire IRC (maybe after life insurance). Every individual and entity that might qualify for the tremendous tax benefits of QSBS treatment, including converting limited liability companies, and S corps to C corporations should be exploring this. Paul pointed out the enhanced benefits under OBBBA, but more importantly (since many likely already know the new QSBS rules), several uncertainties of how QSBS applies in certain complex situations and ways to significantly increase these benefits. It was a terrific presentation even for those who are already frequently planning with QSBS.
Finally, Diana Zeydel, followed the next day by the panel of Diana, Jonathan Blattmachr and Todd Angkatavanich, gave us terrific and creative strategies for adding octane to planning with interests in trusts. There were so many different planning techniques and variations covered, and Diana and the panel covered them brilliantly from a technical, creative and practical standpoint.
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