Top Estate Planning Issues for High-Net-Worth Individuals– January 15, 2016

I had the privilege of attending the 50th Annual Heckerling Institute on Estate Planning in sunny Orlando, Florida this week. Heckerling, as it is commonly called, is the leading nationwide continuing education program for the estate planning community. Other than an excuse to escape the frigid Cleveland winter, it presents an opportunity for attorneys, accountants, financial planners and insurance professionals to discuss the latest tax, estate, legal and investment issues impacting high-net-worth clients.

Below are some of the top issues discussed at the conference that will potentially affect high-net-worth individuals in 2016 and beyond.

  • Lots of discussion (and confusion) surrounding the new consistent basis reporting rules and Form 8971 requiring executors of estates filed after July 31, 2015, to provide tax basis information to both the IRS and recipients of estate property by no later than 30 days after filing the estate tax return. The situation is still developing, but the first reports are due February 29, 2016, and significant penalties can apply for failure to file.
  • Continued need to focus on income tax planning for estates and trusts, including managing the relatively new Net Investment Income Tax (NIIT). To manage a family’s overall tax situation, trustees should review with their advisor issues such as trustee selection, capital gains in trusts, grantor trust status, and state situs. Trustees also should consider using 65-day elections (as explained more in “Minimizing the Net Investment Income Tax on Your Trust”) .
  • Increasing complexity of special-needs planning, including the implementation of new Section 529A ABLE accounts that authorize the creation of tax-exempt accounts for the benefit of disabled individuals, the assets of whom will not count as resources for purposes of applying for public benefits. Currently, Ohio is working on legislation to implement ABLE accounts in Ohio by early 2016.
  • Discussions about techniques to rejuvenate or remake older irrevocable trusts that may not accomplish all of a client’s planning goals. Techniques such as loans, sales, guarantees and joint ventures between trusts can bring new life to old trusts and take advantage of the strengths of newly created trusts. Additionally, trustees may want to consider reformation, decanting or disclaimers to correct defects in older trusts that no longer serve their intended purpose.
  • Continued importance of income tax basis planning, especially given the higher estate tax exemption, condensed trust income tax brackets and increases to the top marginal income tax rates. (Read more in “Planning for the Smaller Estate.”) Reverse or upstream estate planning should also be considered where clients have living ancestors with unused estate tax exemption, as their deaths could provide an opportunity for step-up in tax basis for income tax purposes.

In addition to the above topics, there were more than 40 sessions during the week covering charitable trusts, estate planning for non-U.S. persons, ethical issues in estate planning, partnerships, elder law and estate planning with retirement benefits. One particular session summed up the week perfectly by discussing the constant state of upheaval that will continue to impact tax and wealth planning for clients for the foreseeable future. With constantly changing rules and political uncertainty, it is more critical than ever to seek knowledgeable and informed advisors to help you make important decisions regarding your family’s wealth.


Contact a member of your service team for further discussion.