Trust Planning After the New Tax Law: New perspectives that may be useful to some clients

Trusts & Estate’s Magazine
February 2018

Martin M. Shenkman & Jonathan G. Blattmachr 

President Donald J. Trump signed into law the Tax Cuts and Jobs Act of 2017 (the Act) (more formally referred to as “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget”) on Dec. 22, 2017.1 The Act made many significant changes directly affecting trust taxation and planning. Some include:

• a different tax rate schedule;
• elimination of many itemized deductions;
• permitting trust-owned pass-through entities to qualify for the favorable tax treatment afforded those entities;
• severe restriction of state and local tax (SALT) deductions by individual itemizers that might change the nearly ubiquitous default rule of creating grantor trusts in favor of non-grantor trusts;
• the pressure for moderate wealth families (about $6 million to $8 million for individuals and $ I 2 million to $15 million for couples) to use the increased I temporary wealth transfer tax exemptions by making completed gifts to irrevocable trusts; and
• new electing small business trust rules.

The Act also changed many traditional planning paradigms and, as a result, has had a more significant effect I on trust planning than just its direct changes might suggest. We’ll explore some of these. While there are risks and uncertainties with some of the planning ideas suggested below, the goal is to identify new perspectives on planning that might be useful to certain clients. No doubt, given the complexity and scope of the Act, new concerns, planning ideas and interpretations will evolve.

Read their commentary here.