With big changes in federal tax laws on the horizon, this year’s Jerome Manning ’52 Tax Salon explored how estate planning advisors can prepare for an uncertain environment. Speaker Amy Heller LLM ’09, co-head of private clients/trusts and estates practice at Skadden, Arps, Slate, Meagher & Flom, a partner in the firm’s tax practice, and an adjunct professor at NYU Law, noted that the $13.6 million exemption for estate and gift taxes is scheduled to fall to roughly half its current level at the end of 2025, unless Congress passes new legislation. She pointed, however, to developments in state laws that can give estate planning lawyers flexibility in the face of a changing federal tax regime.
Watch video of the 2024 Jerome Manning ’52 Tax Salon:
Some 38 states, for example, now have statutes that permit trust decanting. “Trust decanting refers to the act of a trustee distributing or pouring assets from one trust to another trust that may have different terms,” Heller explained. Irrevocable trusts can thus be modified by independent parties after their creation, she noted. “Decanting can be a valuable tool in many situations,” enabling fiduciaries to respond to changes in tax law or a beneficiary’s circumstances, she said.
Heller noted, however, that the Internal Revenue Service, which indicated more than a decade ago that it was studying decanting, has yet to issue authoritative guidance. Until the Treasury does so, she added, there may be some uncertainty about the tax consequences of decanting and trust modifications.
The Jerome Manning ’52 Tax Salon was founded in 2022 thanks to a gift from Manning, a former lawyer at Stroock & Stroock & Lavan specializing in estate planning. In addition to serving as an adjunct professor at the Law School for 40 years, Manning also wrote a definitive treatise on estate planning, Manning on Estate Planning. “[The salon] really is a wonderful way for us to have an additional avenue to engage our alumni, engage our students, and engage practitioners on current tax topics,” said Professor of Tax Law Brant Hellwig LLM ’00, faculty director of the Graduate Tax Program, in introducing Heller.
Posted September 6, 2024