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Estate Planning Awareness Week: Take Stock & Trade Stock (At a Discount)

Here we are again: October 17-21, 2016 is National Estate Planning Awareness Week. As always, we like to take this opportunity to encourage folks to review their estate plans, because one simply never knows when an up-to-date plan will be needed. This year, however, that admonition carries extra urgency for clients with larger, taxable estates. There is a time-sensitive window of opportunity that will soon be closing.

This past summer, the IRS and the Obama administration announced proposed regulations under Section 2704 of the Internal Revenue Code that address their long-stated goal to limit the use of valuation discounts for closely held business interests (including interests in family investment partnerships and limited liability companies) to reduce exposure to federal gift and estate taxes for transfers of such interests. The proposed regulations expand the scope of the statute to cover different types of business entities, redefine the concept of “fair market value” to enhance the impact of the statute, and impose certain standards that will make planning more difficult. While there has been much discussion about the validity of these regulations and whether or not the final regulations will mirror proposed regulations, erring on the side of caution compels us to assume the current version of the regulations will become law as early as January 1, 2017.

Accordingly, there is a valuable window for the next couple of months for affluent families to put in place planning structures that take advantage of the current state of the law. Whether or not you currently own any closely held business interests, the tax savings gained by using valuation discounts in wealth and estate planning can be substantial. We are urging clients and advisors to consider implementing discount-based strategies before the end of the year.

National Estate Planning Awareness Week is always a great time to review one’s estate plan to be sure it continues to reflect current objectives and priorities. This year there is a fleeting opportunity for wealthy families to implement certain tax-advantaged strategies before law changes in early 2017.

We remain available and ready to assist clients and advisors in understanding and implementing these strategies while they are still available. Please contact us if we can help.

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