Estate Planning Before Sequestration

As I have previously discussed, the American Tax Relief Act (ATRA) made the current unified credit of the estate tax permanent. While the permanence of the estate tax laws helped established some certainty in this field, there are still a number of questions surrounding the efficacy of the estate planning techniques that were used to take advantage of the favorable estate tax environment. 

With regards to sequestration, some experts argue that the Obama Administration will likely alter or eliminate the use of the following techniques: the Intentionally Defective Grantor Trust, the Short Term Grantor Retained Annuity Trust (GRAT), and the use of Discounted Entities and Dynasty Trusts. The reason that these could be targeted are because many consider them to be “tax loopholes” for the wealthy. It is important to note that these are only guesses, and the actual outcome of sequestration could be much different.

See Rob Clarfeld, Estate Planning Moves BEFORE Sequestration Is Resolved, Forbes, Mar. 8, 2013.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this to my attention.