Step-Transaction and Reciprocal Trust Doctrines: Planning Before 2026, or Earlier if Laws Change

Originally posted in NAEPC Journal of Estate and Tax Planning.

Many tax hurdles can undermine intended planning. This can be especially nettlesome if planning has to be done quickly. Two of the critical tax doctrines that might be used to challenge a plan are the step-transaction doctrine and the reciprocal trust doctrine. This article explores these two fundamental tax doctrines, how the IRS can use them to attack a plan, and proactive steps that might be taken at the planning and administration of a plan and trusts to deflect those challenges.

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