S Corp Issues for Trusts and Estates: Qualified Shareholders, Key Tax Rules, Multiple Trusts, QSST, ESBT

S corporations are subject to stringent rules with limitations on who or what can be a shareholder of an S corporation. For estate planning purposes, trusts and estates counsel must recognize the impact of eligibility rules for S corps, key tax provisions, and reporting and administrative challenges to implement methods to minimize tax liability.

Succession, shareholder agreements, valuation, post-mortem planning, and basis considerations are some of the challenges of developing an estate plan for owners of S corporations. The 2017 tax reform law created significant opportunities, along with some additional complexity, for estate planners and advisers. Clients with ownership interests in an S corporation are less focused on reducing estate taxes and more focused on avoiding probate and reducing future capital gains tax through obtaining a basis step-up.

Estate planning counsel must be adept at applying key tax provisions to current and future estate plans involving S corporations. For existing ESBTs, trusts and estates counsel should determine whether the trust document allows for realignment of beneficiaries to enable use of a QSST or, in the absence of this power, whether a modification of the original trust is appropriate.

Listen as our panel provides a practical guide to the challenges and opportunities of S corporation ownership interests for trusts and estates. The panel will also offer techniques for the use of multiple grantor trusts, s corp trusts, and other items to minimize taxes.