Costly Pitfalls in Old Estate Planning Documents

Author: Klaralee R. Charlton

Best practices in estate planning have changed significantly over the past 20 years. Unfortunately, clients often avoid visits to their estate planning attorney particularly when they believe their estate plan reflects their current wishes. Even if the ultimate dispositive provisions remain the same, the method of transferring assets to loved ones can have drastically different estate and income tax consequences depending on the terms of the document.

In this course we will review many provisions that once were the gold standard in estate planning but that now have less than ideal tax consequences for the taxpayer. We will also analyze methods of reducing income tax when charitable beneficiaries are named in estate planning documents. A basic understanding of estate and fiduciary income tax will be helpful before taking this course.

Publication Date: November 2022

Designed For
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Topics Covered

• Outdated Fiduciaries
• Charitable Beneficiaries
• Traditional AB Trust Planning for Estate Tax
• IRAs Payable to Trusts Post SECURE ACT
• Minor Children Now All Grown Up
• Disabled Beneficiaries

Learning Objectives

• Describe the changes in the tax law that have occurred over the past 25 years
• Identify problematic estate planning strategies and language that will have unintended tax consequences upon the taxpayer's death
• Recognize the necessity of updating estate planning documents to reflect the new tax environment
• Recognize how to analyze the tax savings that can be achieved by modifying a taxpayer's estate plan
• Identify how to recommend estate planning techniques to maximize the benefits the current estate and income tax rules
• Identify the type of power of attorney that will be effective today while the principal is competent and will continue to be valid in the future if or when the principal becomes incompetent
• Identify a court appointed individual or entity given the power to make decisions related to an individual's assets such as collection of income, payment of expenses, purchase/sale of assets, etc.
• Identify the IRC section that permits charitable deductions on Form 1041 only if the governing document requires that the distribution come from income
• Identify the percent of fiduciary accounting income that must be paid annually to a surviving spouse under a Marital QTIP Trust
• Identify the maximum estate tax rate in 2022

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
None

Advance Preparation
None