The IRS recently proposed regulations that will effectively eliminate several commonly used valuation discount strategies for estate and gift tax purposes. If the IRS’s current timetable holds, your clients may lose the ability to take advantage of certain valuation discounts as early as January 1, 2017. For your clients who have an estate large enough to be concerned about the federal estate tax (individuals with $3.5 million and married couples with $7 million), this new regulation will have a massive impact.

You and I have a narrow window to implement strategies that utilize valuation discounts for your clients. Working together, we can deepen your relationship with your clients and provide measurable value to them.

With These Regulations Looming, What Should You Do Now?

First, read our insight brief, The End of Valuation Discounts is Coming  Legalese aside, you’ll learn the background context of valuation discounts as well as the IRS’s new regulatory scheme that effectively eliminates many of our most powerful estate tax planning strategies.

Second, call me as soon as possible. I’d like to discuss with you the type of clients that are the best fit for this planning. In general, most people of significant wealth, such as those with taxable estates (over $5.45 million), near taxable estates (as low as $2 million, depending on the client’s age), significant real estate holdings, or closely held businesses, can receive overall benefit from a valuation discount based strategy, but it’s important to make sure that any planning we do is a good overall fit. That’s why we need to talk, and why I need to work directly with you and your clients at implementing a plan. This is the door-opener you have needed to reconnect with your wealthy clients and prospects.

While the August 4, 2016 IRS Notice is the big motivator here, we’re also paying closer attention to what would happen if Hillary Clinton is elected and follows through on the promise to reduce the Estate Tax exemption to $3.5 Million and the gift tax exemption to $1 Million! This is not nearly as unthinkable as we thought a few months ago.

Delay plays right into the IRS’s hands. January 1, 2017, may seem like a long way off, but it is only a few months away. The clock is ticking. Of course, there is a chance that the proposed regulations may not become final immediately since the IRS will hold a public hearing and there’s at least a 30 day window after that hearing. But, is delay worth the risk? My answer is “no.” Implementing a plan now using current law governing valuation discounts and using the current $5.45M exemption is the best option for your clients.

We are available to assist your clients with the immediate implementation of wealth transfer plans using current law. If you have clients or prospective clients that are motivated to move forward now, please call now to discuss the steps you need to take to protect your client’s wealth.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Menu Title