Article on Retaining, Obtaining, and Sustaining Basis

Turney P. Berry (Wyatt, Tarrant & Combs, LLP, Louisville, KY) and Paul S. Lee (Bernstein Global Wealth Management, New York, NY) recently published an article entitled, Retaining, Obtaining, and Sustaining Basis, 7 Est. Plan. & Community Prop. L.J. 1 (2014). Provided below is an excerpt from the introduction to the article: 

The year 2013 marked the beginning of a significant change in perspective for estate planners with the enactment of the American Taxpayer Relief Act of 2012 (ATRA) and the imposition of the 3.8% Medicare contribution tax on unearned passive income (3.8% Medicare tax), enacted as part of the Health Care and Education Reconciliation Act of 2010 (HCERA) which amended the Patient Protection and Affordable Care Act (PPACA).

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The enactment of ATRA marked the beginning of a “permanent” change in perspective on estate planning for high net worth individuals. The large gap between the transfer and income tax rates–which was the mathematical reason for aggressively transferring assets during lifetime–has narrowed considerably, and in some states there is virtually no difference in the rates. With ATRA’s very generous applicable exclusion provisions, the focus of estate planning will become less about avoiding the transfer taxes and more about avoiding income taxes.