2012 Planning Time Concerns – October Update
As 2012 moves closer to an end, the time pressures and constraints of work to complete the growing volume of 2012 planning will begin to make it difficult, and at some point, impossible to complete planning in a timely fashion. Bear in mind that many plans will require a number of different people to complete steps in order to create and implement a plan. If any necessary step cannot be completed in time, it could impede the completion of an entire plan. While the steps might differ from plan to plan, some or all of the following might present issues:
There are many more issues that might arise. Complex plans take time for even seasoned and skilled advisers to develop. Your making decisions to move millions of dollars into complex and unfamiliar trust structures in such a compressed time frame will make the planning process increasingly difficult and stressful. You should also bear in mind that as the time frame during which planning must be completed is compressed, certain tax doctrines under which the IRS may challenge planning may become increasingly difficult to address (sham transaction doctrine, reciprocal trust doctrine). For example, if several steps, of a plan are completed in short order, the IRS may attempt to collapse the steps into one which may result in adverse tax consequences (step transaction doctrine).
All is not lost, even if you are a Johnny- (or Jane) come-lately. There are many planning steps that might still be completed, even closer to year end. But, these are not going to be the optimal, well thought out plans that can truly capitalize on what might prove to be the most advantageous year to plan in the history of the gift, estate and GST tax. These benefits might include: $5.12 million gift exemption, valuation discounts, grantor trust status, perpetual allocation of GST exemption and more. So, if you think it is too late, let us know and perhaps we can provide some creative alternatives. But late moves will also face risks. For example, some advisers suggest funding a trust with cash now, and substituting hard to value business or real estate assets next year. It is not certain that this may not have an adverse impact depending on the changes to grantor trust rules. An extensive memorandum has been emailed to all clients for whom we have email addresses. If you did not receive this memorandum via email, please visit www.laweasy.com where you can find this memorandum. We have written a book, 2012 Estate Planning: Tax Planning Steps to Take Now, which is available as an e-book from www.amazon.com, or which we will send as a courtesy to clients who are completing 2012 complex trusts. This will explain many of the timing issues and steps you might consider. But even all these resources don’t identify all the issues and concerns.
We will do everything possible to help you take advantage of 2012 planning opportunities. But the sooner you act, and the more proactive you are in working with all your advisers in completing and implementing the plan, the greater the likelihood of your planning being completed in time and achieving its intended goals.
A few final caveats:
We are here to help. Let us know how we can assist you and your other advisers with your planning. But please act quickly and be proactive. At this point you must be advised that it is difficult for any advisers, appraisers, lenders, trust companies, or others to guarantee that every intended component of your plan can be completed on time.
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