Trust, Estate, and Gift Taxation: Recent Developments, Allocation of GST Exemption, Preserving Asset Basis, and More

The rules concerning trust, estate, and gift tax planning are continually changing. Recently, the IRS issued Revenue Procedure 2022-32 which extends the time frame to elect portability of the deceased spouse's unused exemption to five years from the date of death. However, not all estates are eligible for this relief.

The Treasury issued final anti-clawback regulations in 2019. These regulations provide assurance that completed gifts made under a record-high exemption would not later be pulled into a decedent's estate when the exemption sunsets in 2026 or if the current exemption is otherwise reduced. In response to perceived abuses, proposed regulations issued in 2022 outline exceptions to the relief granted under the regulations. Most notably, exceptions include gifts where the donor retains an interest in the asset transferred.

In addition to Revenue Procedure 2022-32 and the proposed anti-clawback exception regulations, there are also proposed regulations addressing administrative expense claims against an estate and other matters, IRS Letter Rulings covering issues with GST allocations and exemptions, trust division and modification's impact on preserving basis, and other issues impacting trust, gift, and estate tax. Trust and estate advisers must stay abreast of new and proposed legislative changes to minimize gift and estate taxes and ensure the seamless transfer of an estate's assets.

Listen as our panel of transfer tax experts reviews the latest developments in estate and gift tax for trust and estate professionals.