The premier conference for estate planning professionals to hear the latest legal and tax strategies in estate planning is presented by The Heckerling Institute on Estate Planning (aka “Heckerling”) every January.  This year marked the 57th year of the conference, which I attended with my colleague, and once again, it did not disappoint, imparting some good takeaways for our clients.  Nine months into 2023 seems like a good time to revisit these items that will impact estate planning techniques in the coming years.

Several presenters spoke on estate and gift tax planning in anticipation of the upcoming sunsetting of the increased lifetime exemption after 2025.  The Tax Cuts and Jobs Act of 2017 doubled each person’s lifetime estate and gift exclusion to $10 million, which, when adjusted for inflation, for 2023 is $12,920,000.  If the TCJA provisions are allowed to sunset, this will likely be cut to about $6,000,000.  Heckerling speakers were generally of the opinion that Congress would not pass legislation extending the increased amounts after 2025.  Clients interested in making substantial gifts should make them prior to 2026 to take advantage of this higher exemption amount.  There should be no concern that gifts made prior to 2026 would be subject to retroactive gift and estate tax due to the IRS 2019 guidance on anti-claw back rules.

Speakers also highlighted the IRS’ helpful guidance in the estate area that came out in 2022 – specifically with respect to the estate portability election and payout requirements for inherited IRA’s. In Rev. Proc. 2022-32 the IRS extended the period for an estate to elect portability of a deceased spouse’s unused exemption (“DSUE”) from 2 years to 5 years. This gives more time for estates that are below the estate tax return filing thresholds, which might be handled by personal representatives or surviving spouses where there is a delay in administering the estate or difficulty obtaining valuations to make the election.

For inherited IRA’s by non-spouses, the payout of required minimum distributions (“RMD”) is now 10 years in most cases. IRS relief, in the form of Notice 2022-53 (and recently extended by Notice 2023-54), now provides that confusion over the timing of the 10 year RMD payment obligation will not result in penalties until after 2023.

The last hot topic at Heckerling this year was a discussion on The Corporate Transparency Act, which is mainly an anti-money laundering law. This act is in regard to the necessary reporting by certain companies to disclose information on their beneficial owners.  Though not affecting trusts directly, if trusts are owners of these reporting companies, then their information will need to be reported as to the beneficiaries, trustees and grantors.   This was enacted on January 1, 2021 and is to become effective January 1, 2024 with a compliance deadline of January 1, 2025.

We are looking forward to seeing what Heckerling will present in January 2024 – updates to these topics and more as we head into an election year. As always, feel free to reach out to Snyder Cohn with any questions.